Automatic vs Manual Dividend Reinvestment

[Kerim]

Let's start this discussion with a running poll of how members deal with their dividends.

Do you:
1) Automatically reinvest your dividends in the same stocks that pay them.
2) Collect your dividends and manually allocate them to other stocks.
3) Some combination of the above (please explain).
4) None of the above, suckers -- I'm living off of my dividends!

[Kerim]

At the moment, I am automatically reinvesting all of my dividends back into the stocks that pay them. I don't have religion on this subject -- I think there are good arguments for both approaches. I find this simpler, and I am comfortable buying more of all of my stocks at current prices. Moreover, I hope that one day my DG portfolio is much larger than it is now and that my current positions are only a fraction of what they will be one day. So while I may look overweight, say, JNJ, I am still happy to be buying a lot more. What is today 12 percent of my portfolio will one day be 5 percent of a much larger one.

[TomK]

Same here. Of course entry point matters, but the reinvested shares at least for now are such a small proportion of the total that I don't hink it matters. Plus, I still think I chose winners, so am happy to keep buying them.

[Ok Red]

I've used both approaches over the years, and will start my DGI portfolio automatically reinvesting dividends. My guess is that I'll eventually shift to manual so that I have more flexibility (I can strategically reinvest based on specific conditions).

[Kerim]

Thanks for joining the forum, Ok Red -- glad to have you here!

For a while I've thought to myself that I would switch from automatic reinvestment to manual when I am averaging about $1000 per month in dividends. But then I realized that this would not be such a simple milestone since my DG portfolio is spread among various accounts (a Roth IRA, a rollover IRA, and a taxable account). As a result, even when I am averaging $1000 per month in dividends overall, it will be spread out in smaller chunks that I will not be able to invest together.

I've got a ways to go before that milestone -- I think I'm averaging about $625 in dividends per month now -- so I have plenty of time to think about how I'll do it when my portfolio is bigger. I will be happy to have that problem, at any rate!

[EricL]

I automatically reinvest dividends in my 401k where I have new money being added monthly but in an IRA account that I just rolled over from an old SEP plan I am planning on pooling the dividends and reinvesting after I build up to a certain amount.

[Dan Mac @DGSInvesting]

I do a manual reinvestment of my dividends. I collect the dividend income and combine with my monthly savings to decide on which company I want to purchase each month. This allows me to invest in the company I believe to offer the best value or that I want more exposure to at any given time.

My broker Scottrade initially didn't have a DRIP service but now they do. They allow you options such as reinvesting in the company that paid the dividend or electing to reinvest all dividends from your portfolio to just a few select companies. I personally haven't had the chance to look more into it as I still like making the manual decision each month.

[Shawnjeffrey]

I intend to take advantage of the Flexible Reinvestment plan that Scottrade has recently set up.

This way I can manually reinvest my dividends without paying commission fees.

[Cardiac]

i own about 30 companies and I automatically reinvest dividends I am 44 and still in ,y accumulation phase. I use Capital One Share builder. (The old ING sharebuilder )

[Kerim]

Hey Cardiac -- thanks for joining up and posting! Glad to have you here.

How long have you been building your dividend growth portfolio?

[Cardiac]

I been investing since I was 18. but shifted to a more discipline GRI approach over a year and a half ago. I had done well with other methods... but felt it was time for a change

[KenBob]

(08-20-2013, 12:22 PM)Dan Mac @DGSInvesting Wrote: I do a manual reinvestment of my dividends. I collect the dividend income and combine with my monthly savings to decide on which company I want to purchase each month. This allows me to invest in the company I believe to offer the best value or that I want more exposure to at any given time.

My broker Scottrade initially didn't have a DRIP service but now they do. They allow you options such as reinvesting in the company that paid the dividend or electing to reinvest all dividends from your portfolio to just a few select companies. I personally haven't had the chance to look more into it as I still like making the manual decision each month.

I do exactly the same for the same reasons. The reinvestment cost is zero, while you get the best value.